1-0 to the Dunnes in latest legal tussle with NAMA in the US as judge grants Gayle her request to “annoy, harass and oppress” NAMA

NAMA’s pursuit of the €185m judgment it obtained against Sean Dunne last year, continued in a Stamford Connecticut court room yesterday where the Dunnes are, at this time, trying to have part of the NAMA case thrown out because, they claim, the US courts don’t have jurisdiction to hear part of NAMA’s case. You see, NAMA is claiming that there has been a fraudulent series of transfers between Sean Dunne and his wife Gayle, and the first big transaction that is being questioned, is the purchase and sale of a €4m apartment in Geneva, Switzerland. The Dunnes contend that Switzerland is not the US, that NAMA is not a US entity and that they, the Dunnes, are Irish, so there it is no right for the US courts to hear this part of the NAMA claim.

NAMA has alleged that a series of transactions, including at least three US property deals, have enriched Gayle at the expense of the Irish tax payer. So far, NAMA is not doing very well in its pursuit of the matter. Last summer, the US courts refused to grant NAMA a freezing order which would restrict the freedom with which Gayle could manage her affairs. The judge was critical of the NAMA case, with parts of it based on reporting in the Daily Mail. There is a full hearing scheduled for September 2014 – yes 19 months hence – and between now and then, there may be a series of interim hearings.

Yesterday’s hearing was a win for the Dunnes. The judge reportedly granted the Dunnes the right to “depose” NAMA CEO Brendan McDonagh and NAMA recovery manager John Coleman, though it should be said there is some confusion over the deposition of Brendan McDonagh this morning with sources disputing that aspect of the reporting. “Deposing” involves a person presenting themselves to the lawyers of your opponent, making a statement in relation to the case and being quizzed about the statement and about the case generally. NAMA had previously objected to either employee being deposed, claiming the Dunnes’ request was designed to “annoy, harass and oppress” NAMA. Yesterday, Judge Barbara Brazzel-Massaro sided with the Dunnes, and sometime in the near future, Brendan and John will need submit themselves for up to eight hours each to the Dunnes’ lawyers. Gayle Dunne is also making it clear that she intends pursuing NAMA for damage to her reputation (should the Dunnes win, of course).

It was claimed by the Dunnes yesterday that last week’s deposition of former NAMA asset manager Kevin Nowlan revealed that Kevin, who would have been closest to the detail of the Dunnes’ affairs, didn’t know of any fact to support a claim against Gayle. We don’t know what NAMA’s assessment of the deposition is.

It will reportedly be the 18th March, 2013 when we hear if the Dunnes were successful in having part of the NAMA claim excluded on grounds of jurisdiction. NAMA is fearful that if the Geneva component is excluded, it will make its case weaker because it won’t be able to tie all the components together in the full hearing in 2014.

Not only does Sean Dunne owe NAMA €185m but the Dunnes were the golden couple of the Celtic Tiger property boom, with Sean buying very expensive land in Ballsbridge with a vision of creating a better version of London’s Knightsbridge in Dublin. His glamorous wife Gayle is a former well-known columnist with the Independent. So the case has glamour, money, mansions and allegations of shenanigans so you can expect to see it reported in detail as it proceeds.

Finally, this is a holiday week in the US and unfortunately we were not able to get you live tweets and photographs of the proceedings yesterday. It is hoped that both sides’ documentation for yesterday’s hearing can be made available later.

UPDATE: 28th February, 2013. Although not yet available on PACER, Simon Carswell in today’s Irish Times reports that the judge handling the Dunne/NAMA case in Connecticut has ordered Gayle Dunne to disclose documentation to NAMA. However Judge Barbara Brazzel-Massaro has rejected NAMA’s request for documents going back all the way to 2004 and has instead imposed an order on Gayle going back to 2008, and further Gayle is entitled to withhold any documents – “concerning”, according to the Irish Times – Sean Dunne. It is not clear what “concerning” means because NAMA’s whole case is about Sean’s wealth and its transfer to Gayle, so you would have thought that most documentation in Gayle’s possession would “concern” Sean. So a victory of sorts for NAMA, but with significant strings attached.

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It would appear that the Dunnes are taking a few pages from the Quinns’ book on how to manage a complex and nigh inscrutable web of assets and transfers. The law in Ireland and abroad is being made a mockery of in the process.

The Dunnes — both of them now — owe the Irish people millions, and it would appear that they have taken the attitude of Oscar the Grouch when it comes to paying it back — shutting themselves in their rubbish bin and hurling garbage at anyone who draws near.

This is the result of a lax attitude to debt on Ireland’s part over the last 3/4 years. Top debtors like Treasury Holdings, the Quinn family, and egregious ones like the Anglo directors have simply not been pursued with any vigour. This has clearly emboldened the likes of the Dunnes to attempt to intimidate Irish officials with depositions. If such tactic end up actually working, every executive involved at Nama should be turfed out the very next Friday.

@OMF, whilst there is a judgment against Sean Dunne and his companies, Gayle Dunne is not a NAMA debtor. NAMA is accusing her of benefitting from fraudulent transfers from her husband but Gayle strenuously denies this and has threatened action against NAMA for blackening her name. So Sean Dunne owes the Irish people millions. But unless a court rules otherwise, Gayle Dunne doesn’t owe us a bean.

@ OMF Do you really believe that NAMA are doing all this for the good of the Irish tax payer? Because I don’t. They are a self serving lot, the “tax payer” only comes in at the very end. It is a bit like when we used to say a decade of the Rosary long ago. The “Glory be to the our Father” bit, is only thrown in at the end a a sort of an aside. That’s the way NAMA use the “Irish Taxpayer” a sort of after thought to justify their gravy train.

It will be interesting to see if NAMA can hide behind the vale of secrecy they blithely quote to the Irish tax payer. American judges might decide to rip the vale of secrecy off NAMA and that is the risk they are taking. Also, Americans don’t like people chasing down entrepreneurs who are trying to reinvent themselves. They look up to that sort of thing especially a Gayle type who has got gumption. Yes, the Dunnes made mistakes unlike the NAMA people pursuing him? Does that mean that NAMA have the right to chase them across three enchanted countries to recover some of paddy’s unlucky Leprechaun money that he thinks has gone missing?

If was Dunne, I would be getting very detailed confessions at these depositions. I would be quoting American law while NAMA would be complaining that they are a semi secret organisation more akin to the Knights and have no right to be deposed, exposed by the American adversarial system.

Throwing good money after bad. Pathetic that there is no criminal sanction against diverting assets in Irish compamy or criminal lawt-the courts have to rely on contempt of court (a hangover from the old royal prerogative). Seems to be out of the question to prosecute the “quality” for perjury, so we have in effect a culture of impunity.
There is a rich irony for the IT in all of this. Back in the day, c 2006/7 I recall that Frank McDonald wrote a mildly critical piece on Dunne’s plans for Ballsbridge in the IT. Within days SD was given a full page “right of reply” in what must surely rank as one of the most craven and shameful low points for the wretched Irish mainstream media.

Ah Paddy, if you are that interested in my views on the matter, just ask me. As for # Please tell me I’m wrong, you are wrong. That Irish Times editorial was not written by Frank McDonald. He may have had an anti D4 development point of view, but he is entitled and qualified to express such an opinion, being very clued in on planning and architecture in Ireland. That piece was written by an anonymous author who wrongly accused Sean Dunne of closing down the Jurys and Berkeley Court Hotels, resulting in hundreds of redundancies. That decision was in fact made by the Doyle family who decided to close the hotels in order to cash in on the property boom. As was their prerogative. Sean, instead of suing the IT chose to correct the record by way of letter to the editor that the IT graciously published. This is what Paul Drury referred to last week in the Denis O’Brien libel case as “the right to reply”. Yet # Please Tell Me I’m Wrong has a problem with people putting the record straight in this manner. Freedom of expression and opinion applies to everyone.

I would give my right arm to question McDonagh for eight hours in an American court deposition. What an opportunity! With one session, If Gayle asks the right questions she could bury NAMA very deep indeed.

@wstt I’ll take you on as an unpaid consultant. I already have the basis of a very good legal case against Nama that goes to the heart of the “Fair Procedures” this arm of the government are obliged to give debtors (not to mention third parties like me who have nothing to do with them). The longer this US case goes on, the more Nama are exposing themselves to scrutiny, and what I have seen so far about their internal procedures would make the hairs on an Irish High Court judges back stand on end…..

I believe WSTT was or is a Nama debtor from reading his posts. I’d be interested in your view on asset transfers. I see Nama today bragging about how successful they have been in reversing asset transfers between developers and wives. This begs a lot of questions.

1) Was it a condition that the debtor reverse asset transfers in order to get their business plan passed.
2) Did Nama tell them this was a condition? If not why not?
3) Was the debtors wife herself a Nama debtor?
4) Was consideration paid for the transfer?
5) Did Nama expect the debtor to be able to reverse court ordered and approved transfers? Did Nama deem the debtor “uncooperative” if the debtor did not have the power to reverse a perfectly legal asset transfer?
6) What part of the Nama Act states the main aim of Nama is the reversal of legal asset transfers going back five years between debtors and third parties and that Nama is entitled to use this as a deal breaker in its dealing with developers?
7) Was the debtor insolvent at the time of the transfer and did they know they were insolvent? (In order for Nama to reverse asset transfers going back over five years they must prove the transfer was fraudulent because the debtor knew he was insolvent. Can Nama seriously claim any debtor knew in 2008 that they were insolvent? If all developers in Ireland were insolvent in 2008 and knew so, why did the government guarantee the Irish banks? Why didn’t Nama acquire property loans from the banks at a 90, 0r 100% haircut. Indeed, why did the banks not have to PAY NAMA to take these loans??????)

I especially love this line in the Indo today:

“Transferring property to family members is not illegal; however, NAMA has powers to seek to reverse transfers through the courts.”

OF COURSE! Nama has powers above and beyond the law! And that’s constitutional to be sure.

There are references in previous press coverage to “court ordered transfers”, along with the claim that SD cannot/will not reveal any details of these because they relate to either current or previous marriage – and are ‘in camera’.

I haven’t followed the case in detail, but it isn’t immediately apparent why transfers to GK would have been directed by a court, nor is it clear (on skimming) whether this is relevant to some or all transfers. What the basis for those court orders was is presumably relevant.

Fraudulent conveyance is something that can be inferred, and one aspect that a court would have to consider would be any conditionality attached to any of the transfers. One example would be if it was a condition that SD could continue to benefit in some way from the property, or could do so at some point in the future.

One would wonder how refusal to give details surrounding the transfers might affect that inference.

Another aspect would be one not strictly of SD knowing (or not) that he was insolvent, but of whether one or more transfer was “to delay, hinder and defeat the payment of the debt due”.

Here, the dates of the transfers should be considered in light of a) what SD would have known about his own businesses and b) the context, including reasonable and common speculation in public media about property development in Ireland in general and SD”s businesses in particular.

There are PG’s or Personsal Guarantees involved here,assume net worth statement was provided and updated to now burnt lenders.
One would think that any reduction in said net worth by transferring assets to say wife,would require consent.Failure to obtain or inform same should have consequences…..not in any way suggesting such consent was not sought,I have NOT seen the loan docs-mere idle speculation….

@ John Gallaher, I am not an expert and have never given a personal guarantee, but I do not think that is how personal guarantees work. If that was the case a debtor with personal guarantees would have to get a banks permission to spend any money beyond basic living expenses. Personal guarantees are not guaranteed on real property or assets And as far as I am aware when developers signed personal guarantees they were NOT asked to give a statement of net worth to support the guarantees. It was the opposite, they were told the personal guarantees didn’t really mean anything and would never be called in.

PG’s only become a true actionable debt when they are called in. So if you start transferring personal unencumbered assets for no consideration after your personal guarantees are called in, such transfers can be reversed. However transfers made when you are solvent, or when you are insolvent but for consideration, are not affected by the fact that you had personal guarantees at that time.

Saying that none of this has been tested in the courts as Nama seem to have relied on the strong arm technique to get developers to reverse asset transfers (an approach I believe is illegal in itself as it goes against fair procedures) So the whole concept of any bank being successful in reversing asset transfers on foot of the debtor in question having personal guarantees has never been tested. In my opinion, Nama would be unsuccessful in court trying to reverse asset transfers that took place prior to them seeking a personal guarantee judgment against a debtor. Unless of course they bankrupt the same person after calling in the personal guarantee, then it appears under the new legislation asset transfers for no consideration can be reversed by the Trustee, but for the benefit of all creditors, not just one bank.

That was always my understanding – if Mr N transfers any kind of property to Mrs N for full consideration then there is nothing fraudulent about that transaction. Not only that, but there is no net disposition – so the creditor would have little of substance to complain about.

Where it might get a bit weird is if an argument were made that the transfer or payment by Mrs N was something that could be argued to be of full consideration in money or moneys worth to Mr N, but which would have significantly less value to the creditor.

That’s a double edged sword. If that is the case the banks would have had to ask the wives for their approval before the husband could sign a PG, as he was effectively signing away the marital estate without her knowledge.

Back to basics here for a minute, and speaking in a general sense:
If NAMA was not even in the picture, and developers wives wealth was not even in the picture, someone still has to pick up the tab for multi-million dollar private investments gone wrong.
You would think that should be those who stood to gain from the investment in the first place.
Yet only the taxpayer is paying,
Meanwhile the taxpayer gets to watch a bunch of lawyers duke it, while they rely on blogs and marches to try and stop hospitals and schools closing to pay that same tab.
Just sayin’ like….

@GK,
1) Was it a condition that the debtor reverse asset transfers in order to get their business plan passed?

Yes.

2) Did Nama tell them this was a condition? If not why not?

Yes, NAMA told them.

3) Was the debtors wife herself a Nama debtor?

Sometimes, but rarely. This is where NAMA stepped out of line and into a grey area. By demanding that a legally transferred asset was reversed in order for NAMA to approve a business plan, NAMA’s actions bordered on extortion.

4) Was consideration paid for the transfer?

The initial transfer – not generally. The reversal – never to my knowledge.

5) Did Nama expect the debtor to be able to reverse court ordered and approved transfers?

I would doubt that NAMA could insist on reversing a court ordered and approved transfer. That would not stop them trying though.

Did Nama deem the debtor “uncooperative” if the debtor did not have the power to reverse a perfectly legal asset transfer?

Very likely. Any hint of opposition to NAMA’s wishes and the debtor is deemed “uncooperative”. There is this farcical situation where NAMA tells the debtor what they want him/her to do and then insists on the debtor sending in a “request” on a Form A asking for NAMA’s permission to do it! This subterfuge is to put the onus on the debtor and to ensure that any shortfall can be seen as the debtor’s fault and not NAMA’s.

6) What part of the Nama Act states the main aim of Nama is the reversal of legal asset transfers going back five years between debtors and third parties and that Nama is entitled to use this as a deal breaker in its dealing with developers?

None, and the reversal of legal asset transfers go back beyond five years if NAMA can “squeeze” the debtors enough. I drive behind cars all the time in the USA with “The Fighting Irish” plates on the rear. It would make a cat laugh. iWe have forgotten how to fight except in drunken brawls. We are victims controlled by bullies, whether in NAMA or in Europe. And NAMA has no right to use legitimately transferred property as a deal breaker, or use it to to distinguish between a compliant or non-compliant debtor – but they do.don’t

7) Was the debtor insolvent at the time of the transfer and did they know they were insolvent? (In order for Nama to reverse asset transfers going back over five years they must prove the transfer was fraudulent because the debtor knew he was insolvent.

True, but when you don’t play by the rules, are above the law, have powers that no-one else has and are the reigning schoolyard bully, you will try it on. And if your victims are sufficiently browbeaten, you will get away with it.

Can Nama seriously claim any debtor knew in 2008 that they were insolvent?

No, but the spin masters re-write history all the time and if you have a compliant judiciary who’s only relevant question seems to be “Did you get the money?” then it’s easy to claim, and have accepted, what is not true.

If all developers in Ireland were insolvent in 2008 and knew so, why did the government guarantee the Irish banks? Why didn’t Nama acquire property loans from the banks at a 90, 0r 100% haircut. Indeed, why did the banks not have to PAY NAMA to take these loans??????)

The government were even thicker than the developers. The politicians and a few advisors were the main cause of spreading what was a private plague and turning the place into New York in “I am Legend”

The turn of the century developers – McNamara, Pierse, Carroll, et al are gone and will never be allowed back. It is over. It will take a new generation of people who were 25 and without mortgages in 2007 (now 30) to revive this country. The rest of us that were in the property business have leprosy and are finished. The irony of it all is that NAMA today announced that it is now a property developer! Jesus wept.

@Patrick, of course I’m close to the case, I’m in it! Discovery in the US is incredibly broad and really quite burdensome. It’s good that the judge stopped the Nama runaway train on this case and limited it to information from 2008. It shows she’s making Nama stick to the verified statement of claim, and not allowing their very expensive attorneys to make it up as they go along. At the last hearing their attorney started to bleat about “complex fraud” going back to my kindergarten days, even though they have never claimed that previously. So she obviously saw through his attempt to grab the headlines. I have already offered Nama voluntary discovery regarding the properties in question and they have turned me down. So they are now going to get what I would have given them anyway. But discovery works two ways. Gavin Sheridan may have problems getting minutes of board meeting from Nama. I will not. They must produce comprehensive and detailed discovery, to date they have hidden and redacted documents, but what they have produced it a pretty scary insight into the illegal methods this agency has adopted to date. They are meant to have produced the plug holes in their discovery before the next court date March 18th, if they have not, that day will be all about them explaining to us all why they are hiding documents. It’s free for all regarding discovery in the US, if they want to continue operating as a “secret society” they should never have taken this case.

@NWL, Nama were looking for ME to discover all of Sean and his companies financial info, correspondence with third parties etc. Obviously I do not have such information as I was never involved in Sean’s business. Now it’s a very basic premise of the law that you cannot order someone else to procure documents from a third party. But Nama of course think they are above the law, They were successful in forcing some developers to “procure” statements of affairs from their wives and relatives, even though they have nothing to do with Nama. Go to a court with that kind of baloney though, and you won’t get very far.

@Patrick, when you don’t live in Ireland you never even heard about books like this, besides read them. But in fairness to Lyons it doesn’t sound like too inaccurate a description! There was a gang of them in it though, developers, objectors, banks, hoteliers and of course the lovely Lucinda.

@GK,
I trust the deposition went well today, Gayle. I realise how difficult it is to get a straight answer, or indeed any answer, from a representative of NAMA. I’m not sure whether they just don’t have the wit to understand the question or whether they have been brainwashed into saying nothing to “obligors'” (it’s the new description for borrowers) queries. I think they took a few lessons from Gerry Adams – stare at the wall and say nothing. I doubt that the Connecticut courts would be as amenable to the strategy as our kangaroo courts, though.